Gold Soars Amid Rising Global Debt and Credit Risks

Vikram Dhawan of Nippon India MF believes that gold is in a once-in-a-generation bull market. He points out that prominent figures such as Warren Buffett and Ben Bernanke have publicly stated their lack of understanding about gold, making it clear that investing in the precious metal is not for the faint of heart.

The global debt-to-GDP ratio has increased significantly over the past 25 years, from $20 trillion to $110 trillion in sovereign debt and from $80 trillion to $370 trillion in overall debt. This surge in debt has led to a rise in credit risks, causing central banks to buy gold as a safe-haven asset.

Dhawan argues that with the current high levels of debt, deflation is a major concern for the global economy. To mitigate this risk, central banks must tolerate higher inflation and refrain from raising interest rates too much. With most central banks planning to cut interest rates, Dhawan believes that investing in gold is becoming increasingly attractive.